CHRIS HAYES, MSNBC HOST, ALL IN WITH CHRIS HAYES: Good evening from New York, I`m Chris Hayes.

The White House today got the best news it has had in two months about Obamacare. We will bring that news to you in a moment as well as the president`s latest push to get young people to enroll.

But it has always been the case, the political fate of Obamacare would rest ultimately on its performance, what it did for people`s lives and not on the lies and slander directed at it from the right. And at the performance of law improves, the life cycle of the smears deployed against it get shorter and shorter which brings us to the latest example.

Did you hear about the guy whose baby was denied coverage under Obamacare?

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Those family plan quotes included myself, my wife, our seven, five, and 3-year-old, with our 18-month-old was left off and I was advised no. They don`t allow children to be on family plan who are under 10 years of age.

(END VIDEOCLIP)

HAYES: What? This is the worst Obamacare story yet. I mean, this guy tried to sign his family up for insurance on the New State exchange and they refused to enroll his 18-month-old baby. Obamacare is anti-toddler? The story, as you might imagine, got a lot of pick up in the right-wing media. The "New York Post" original reporting surfaced again and again all over conservative press and of course land a distraught father on Fox News. Even Republican House Speaker John Boehner climbed aboard the Obamacare hates toddlers bandwagon, tweeting "I couldn`t believe what I was being told said a dad who learned Obamacare wouldn`t cover his baby."

Now, hearing this story you might be asking yourself the question that any journalist writing a story about it or producer putting together a TV segment about it, or just person with basic literacy and common sense would surely asking, which is could it possibly be the case that Obamacare was denying coverage to a toddler. Well, the answer to that very good question is no. Of course not. No, of course not, that is not true. A spokesman from the New York Health Department telling "Capital New York" the story was "100 percent false. Of course everyone is covered in the family policy."

In fact it appears a clerical error was behind the confusion. A clerical error that had been cleared up before the father appeared on Fox News to talk about the anti-toddler scourge that is Obamacare. And a clerical error that it appears he himself might have been behind. "Capital New York" reporting "The mix-up appears to have been rooted in Kelly`s application, which originally listed only three of his children even though he has four. When the clerical error was discovered, it was corrected" the department spokesman said. How dare this president not know how many kids this Long Island dad has.

And of course, predictably, the dad in question also happens to be a right-wing activist who in 2011 ran and lost on the Conservative Party line for a seat on his local county legislature. Now this particular little viral lie never quite jumped the species barriers -- the mainstream media -- and that is at least partly because the web site is now up and by all appearances, really running.

The big news today -- a source telling "Politico" that Obamacare has enrolled 29,000 people in the first 48 hours of the site`s re-launch. That`s more than enrolled in the entire month of October. If you want an apples-to-apples comparison, here`s what the first 48 hours of the original launch looked like compared to the first two days of the re-launch. The president -- there it is. Yes, that`s the comparison right there -- 248 to 29,000. The President, meanwhile, is pushing enrollment every day for now until December 23rd deadline to get coverage that starts January 1st. Today, he focused on young people whose participation is crucial to the success of the law.

(BEGIN VIDEOCLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I do remember what it was like being 27 or 28 and aside from the occasional basketball injury, you know, most of the time I kind of felt like I had nothing to worry about. Of course that`s what most people think until they have something to worry about. But at that point oftentimes it`s too late.

(END VIDEOCLIP)

HAYES: Joining me now Eric Boehlert, senior fellow at Media Matters for America. All right, Eric, I think there`s a interesting phenomenon here in which you`ve got this stop clock being (right) twice a day. Same with the conservative media who are disposed to hate the law, think it`s terrible. And who were right about the website`s problems out of the box --

ERIC BOEHLERT, SENIOR FELLOW AT MEDIA MATTERS FOR AMERICA: Right.

HAYES: -- for reasons determined by their ideological predisposition. As the website improves, the horror stories get further and further tethered from reality.

BOEHLERT: Yes, and as you said you know eventually time is going to catch up with them because it -- this is sort of reporting by anecdote, you know? Which is never a good way to do any kind of journalism, and the anecdote you just explained fell apart in about eight hours. Interesting, right? Started in "New York Post" in the morning and went to Fox News at night, spread everywhere in the right-wing vehicles or in between and the reason it didn`t jump to the mainstream I think is because it did fall apart so quickly. So, we have you know the Republican conservative opposition to the healthcare now is basically based on these horror stories. In fact, I saw a headline today online saying `Republicans Hoping Horror Stories Will` -- basically -- `Lead them to the Next Year`s Election.`

HAYES: Right.

BOEHLERT: I don`t think it`s going to last for 50 weeks, but this is what they put all their -- all their emphasis on and we`re just going to hear more and more of them. But as you say, they sort of get further and further from any reality.

HAYES: Well, the particular crucial test I think about whether what the electoral consequences, political consequences are broadly are whether they do make that jump. So when you`re talking about the plan cancellation stories, which when you scratch the surface, a lot of them were way less than they appeared. I mean, we`re talking about people who qualified for subsidies -

BOEHLERT: Right.

HAYES: -- and were not reported as qualifying for subsidies, right? Those really did have an impact because -

BOEHLERT: Oh, yes.

HAYES: -- they limit it to conservative media but I do think the mainstream media having been burned by a few of those stories has gotten more skeptical of these things that are flying now.

BOEHLERT: Well, we`ll see. Again, those cancellation stories, they -- for a week there -- they were everywhere and every -- I think the vast majority of Americans thought millions of people just lost their health insurance.

HAYES: Right.

BOEHLERT: They got a cancellation notice inviting them to join another plan that may cost them less.

HAYES: Right.

BOEHLERT: So that was -- that was a mainstream media problem and hopefully they got burned so they`re going to sort of leave these other stories alone. But Fox is just going to push this forever. And you say -- you were suggesting is it into these horror stories and Paul Kirkman raised a good -- interesting -- comparison this week -- Benghazi healthcare -- right? Benghazi, there`s no reason to really keep talking about the cover up Benghazi but they`re going to keep talking about it. And so I think these horror stories within the right-wing media are going to contend -- are going to continue ad nauseum.

HAYES: And people I mean -

BOEHLERT: -- because that`s what they`re upset -

HAYES: -- and there are people out there who are going to think Obama, who saw this segment -

BOEHLERT: Yes, absolutely.

HAYES: -- thinks Obama -- I mean, if you thought that, yes I would hate the law and the President too. I mean, if it were the case that Obamacare just capriciously denied an 18-month-old coverage, then that would be a terrible law. And there`s that old Winston Churchill quote about you know a lie getting halfway around the world -

BOEHLERT: Yes.

HAYES: -- while the truth puts on its pants. But you know, there`s some percentage of people that are going to think that.

BOEHLERT: Yes, no, the Fox (fear zone) really put on their pants in that analogy, meaning that story was already debunked before he showed up on Sean Hannity. And so, no, they don`t correct any of these. You know, Fox was sort of pushing this other story a couple -- within the last few days -- about a cancer survivor who was -- who was -- going to not have insurance and just basically die if he -- you know -- if the cancer came back. And they had him on, and an insurance broker got in touch with them off the air and said `Whoa, you still have insurance -- you didn`t get canceled.` And so, again, that story -

HAYES: That is (inaudible) -

BOEHLERT: -- did not hold up and I don`t think Fox has ever readdressed that issue.

HAYES: It`s also -- all of this -- it strikes me -- there`s something kind of sick about it. I mean, these are actual people`s lives -

BOEHLERT: Yes.

HAYES: -- the people at the center of these stories, I don`t begrudge them anything because -

BOEHLERT: (Inaudible).

HAYES: -- I think they`re confused -

BOEHLERT: Sure.

HAYES: But to sort of manipulate people in this way is scaring people as we were trying to just clear away the confusion. Again, I say this to conservatives and I said it about the website and I will say it to them again -- to those of you who are watching -- if you think it`s so bad, then just let -- like, it`s going to play out in your favor.

BOEHLERT: Right.

HAYES: And that was true about the website -

BOEHLERT: Right.

HAYES: -- I kept saying don`t shut down the government, let the website launch, and it did play out in their favor because the website didn`t work.

BOEHLERT: Right.

HAYES: So if you think the whole policy is bad, let it play out in your favor and don`t go around spreading lies about toddlers. Eric Boehlert of Media Matters, thank you. Joining me now Congressman Keith Ellison of Minnesota, co-chair of the Congressional Progressive Caucus. And, Congressman, there`s an interesting piece in the "Huffington Post" today -- Ryan Grim co-authored it -- about the fact that the success of the law in terms of insuring the uninsured actually rests on a lot of densely-populated urban areas where the vast majority of the uninsured are. As someone who`s representing an urban area yourself, how is Obamacare working out two months in from your perspective in your district?

REP. KEITH ELLISON (D), MINNESOTA: In Minnesota, we have something called MNsure, and it`s working well. You know, the fact is people are enrolling, thousands of people have enrolled and set up insurance already. Many more than that have opened up accounts and have been shopping online. So, we`re not hearing these kind of complaints. In fact, I`ve been having meetings in the district and folks used to show up in big numbers, and now the last meeting we had kind of trailed off because people kind of know what`s going on. But we`re going to keep doing them -- yes, I mean -

HAYES: So you think -- you think the level of confusion or uncertainty and panic that I think has been whipped up in people, you know, with (inaudible) folks at Fox, some of the major media by the website`s actual manifest dysfunction, that you`re observing that that is declining now?

ELLISON: I absolutely do. I tell you this, I think that as time goes on, they`re going to be dependent upon these sort of made-up stories -- like this fellow that you were just talking about. But the numbers are going to be more and more in favor of the law. And you know the fact of the matter is that this is technology, it is going to be fixed, there are people working on it and you know I`d rather be the one who helped uninsured get insured and help reduce medical inflation for people and help them get good coverage than the one who`s complaining about everything.

HAYES: Yes, what are your colleagues -- I`m really confused about what Republicans are going to do with themselves. I mean, I guess they`ll vote for repeal again -- the repeal strategy --

ELLISON: Oh, yes.

HAYES: -- like, what are -- what are your colleagues do for the rest of this congress which is nearing its midway point?

ELLISON: Well, we haven`t done very much at all. As a matter of fact, Speaker Boehner said he wanted to be judged not on the laws that he passed but on the laws that he repealed. He hasn`t even repealed any -- although he has tried. We got to give him his props on that. And you know to even shut the government down over it. You know, we`d like to appeal to their better nature if we could. You know, if we could get something done on immigration, that would be awesome.

HAYES: Yes.

ELLISON: If we could avoid -- if we could lift the sequester and put some sort of a budget together that would help put Americans back to work -- that would be good. And you know, I`m not cynical, so I`m going to keep on pushing, I`m --

HAYES: I`m not cynical either, we`re actually presenting a leader in the show -- a vision of what a bizarre congress that actually functioned looked like -- but in this universe in which we live, you and some of your colleagues have an idea for something the President could actually do by himself -

ELLISON: That`s right.

HAYES: -- to boost wages for working people. What is that?

ELLISON: Well, you know, we -- you know there are about 2 million workers who work for federal contractors. These contractors pay people substandard wage -- $7.25, 14 grand a year, no benefits. People have been on these jobs for literally decades, years and years and an executive order could solve this problem/ And so we wrote a letter to the President about two months ago asking him to do something about and I gave another letter today, and he you know I think he`s is sincere. I mean, he gave a wonderful speech about income and equality today, and he urged Congress to raise the minimum wage. But in this Congress I think we`re going to have to look at what the executive can do -

HAYES: That`s right.

ELLISON: -- and doing something with these contractors who pay people substandard pay is something we could do right away. So like tomorrow at the Air and Space Museum the Progressive Caucus` going to be standing with low-wage workers who work at the Air and Space Museum, and demanding that they get paid by these contractors.

HAYES: An executive -- and executive order, the signature of the President could raise wages for 2 million workers who are currently employed by federal contractors making substandard wages. Congressman Keith Ellison, thank you for your time tonight. Coming up.

(BEGIN VIDEOCLIP)

JOHN BOEHNER, SPEAKER OF THE UNITED STATES HOUSE OF REPRESENTATIVES: I think this immigration issue`s been kicked around this town now for 15 years, so I said the day after the election it was time for Congress to do its work.

(END VIDEOCLIP)

HAYES: The alternate reality in which Congress does its work and passes immigration reform -- the very first installment in our special "All In Bizarro Congress" series with bonus facial hair, when we return.

(COMMERCIAL BREAK)

HAYES: President Obama is now citing the Pope in his push to talk about and attack income inequality, which some are calling the best economic speech of his presidency, ahead.

(COMMERCIAL BREAK)

HAYES: Today John Boehner, Speaker of the least-productive House of Representatives in history took the floor the cast the blame elsewhere.

(BEGIN VIDEOCLIP)

BOEHNER: Today, the House has passed nearly 150 bills this congress that the United States Senate has failed to act on. The Senate, the President continue to stand in the way of the people`s priorities. When will they start listening to the American people?

(END VIDEOCLIP)

HAYES: John Boehner is trying to shift the blame to the Senate, but the reality is there are a number of bills that the American people say they support -- bills that would almost certainly have a majority support in the House if they were just brought to the floor for a vote. Now, there was however a promising sign out of Boehner`s office. Today, news that he hired Becky Tallent who is a prominent immigration policy wonk, former McCain staffer who worked on the last big comprehensive immigration reform push in 2006. In response, Boehner was savaged in the conservative media for welling out on comprehensive immigration reform -- or amnesty as they call it. The Speaker hiring Tallent got us thinking about the tantalizing possibilities of what this House could do -- tomorrow and every day until the end of the session, if they really did listen to the American people.

So, tonight, we bring you the first installment of the series we will be presenting every day for the rest of this congressional session -- the Bizarro Congress. We have reached into the alternate world in which John Boehner actually does his job.

(BEGIN VIDEOCLIP)

HAYES, IN COSTUME: Good evening from New York, I`m Chris Hayes. It`s a historic day, many thought they would never see. Today the House of Representatives has after years of struggle, passed a comprehensive immigration bill.

BOEHNER: The (inaudible), the `ayes` have it.

HAYES: In a stunning development, just one day after John Boehner hired prominent immigration adviser Becky Tallent, the Speaker brought the Senate`s comprehensive immigration bill to the floor for a vote. The result was what advocates had been saying it would be all along -- 29 Republicans who were on record supporting reform joined with the entire Democratic Caucus to pass the Senate`s plan. Jubilation among activists in the House gallery on this historic day was unmistakable. After the vote, triumphant Speaker Boehner took a victory lap.

BOEHNER: We have victory today for the American people. And frankly we also had a victory for common sense.

HAYES: Democrats won`t criticize the House GOP for its inaction on immigration reform rushed to congratulate House Republicans.

OBAMA: I congratulated the Republicans.

Male: The Republicans stepped up and acted as adults.

Female: First let me just say that as a Floridian that I want to commend the Republicans -

HAYES: The Chamber of Commerce issuing a statement of support along with the AFL-CIO, leading conservatives (inaudible) that supported comprehensive approach praised the House`s actions.

Male: This is a very encouraging time because if we can get immigration right, imagine there`s possibilities of cats and dogs living with one another in other policy areas as well.

HAYES: Once signed into law, border security, economic opportunity and immigration modernization act will end the mass deportations that have spiked under President Obama. The law will provide a path to citizenship to many of the almost 12 million people estimated to be living in the country without status, including the 65,000 undocumented students who graduate high school each year. For millions of our fellow Americans, this law will end years of fear, harassment and anxiety.

Female: This takes off a lot of weight off of many shoulders around the United States.

HAYES: Despite the millions helped by the law, Tea Party Republicans were livid.

MICHELE BACHMANN, REPUBLICAN MEMBER OF THE UNITED STATES HOUSE OF REPRESENTATIVES, REPRESENTING MINNESOTA`S 6TH CONGRESSIONAL DISTRICT: Amnesty could also cost something more than just money. It could cost a nation.

HAYES: The Congressional Budget Office estimates the law will boost the economy by more than 3 percent, cut the deficit by almost $200 billion over ten years in savings from new workers, new businesses and new taxpayers. Those numbers were not lost on the party`s fiscal hawks.

Male: I`m not aware of any trade association, any major or minor business group that doesn`t recognize that we need more people, more workers who are customers -

HAYES: And as fiscal hawks cheered the law, the party`s leadership recognized today`s historic vote gives the Republican Party renewed political life.

Male: This is not a short-term, Bob, I know that everything isn`t going to change in a year. But if we don`t start now, we`re not going to have any more success in four years, eight years or 12 years.

HAYES: Joining me now back in this reality is Janet Murguia, President of the National Council of La Raza discuss our actual universe and the prospects for reform based on the news of Boehner`s surprising staffing choice. Janet, this staffing choice -- staffing choices of members of Congress don`t normally make news, but this one did. It got tons of attention -- Senator Jeff Flakes, Senator John McCain tweeting congratulations, "Drudge Report" attacking him. What -- why all the hubbub about a staffer?

JANET MURGUIA, PRESIDENT OF THE NATIONAL COUNCIL OF LA RAZA: Well, I think it is important as someone who worked on Capitol Hill and worked in the White House. I understand how important staff can be and there`s no question that the Speaker sends an important message by saying someone who has as much experience, a great reputation on frankly with members on both sides of the aisle like Becky Tallent does, and someone who`s a veteran of Hill politics and who`s been part of big, hairy pieces of legislation -- shepherding those through and working so closely with a long well-respected senator like McCain as well as a presidential candidate. There`s no question that that is an important hire. Obviously, I don`t want to necessarily give her the kiss of death and endorse her -

HAYES: You should condemn her.

MURGUIA: -- because I am condemning her because I think there are going to be lots of challenges and ultimately, the Speaker is going to be accountable --

HAYES: This is the point, I mean -

MURGUIA: -- the Speaker is accountable, but Becky I think -- Becky`s hire -- I think raises the potential for a lot more engagement, and that`s something that`s been missing -- the discussion in the House. And someone who`s on point for the Speaker -

HAYES: They`re trying -- they are trying -- to just let this ignore it, it`ll go away. And one of the points of that little Bizarro World Congress is that it could -- literally could be the case. That John Boehner brought this -- the Senate bill -- without a change or to the floor tomorrow as he has done with numerous pieces of legislation -- I believe three at my last count. He could do that tomorrow, it could be signed by the end of the day and the day after tomorrow the specter of deportation that hangs over millions of our fellow Americans could be erased. This -- John Boehner could do this.

MURGUIA: There`s no question that he has the authority, the potential, the power to bring this bill to the floor tomorrow. His caucus is not that excited about it -- it`s split -- and I think there is a sincere effort by the Speaker to try to figure out how he can make that happen and still maintain some support for the bill that would come up. I think that there is a sentiment among some in his caucus that the Senate bill now is tantamount -- you know -- just the term -- the Senate bill -- has now baggage around it.

HAYES: OK, I have to remind people what that Senate bill was. I mean, that thing was so watered down, they stuffed $30 billion of ridiculous and inexcusable militarized pork on the border in which we`re going to have like automated guns every five feet -- I`m exaggerating, but just a little bit. That just to get conservatives to sign onto that -- that thing was so watered down to get those votes, the thought that that is (inaudible) and the hoops people have to jump into -- jump through -- I mean, there`s all sorts of problems with the Senate bill. So if that`s not enough for the House Republicans, I don`t know what would be.

MURGUIA: You know, I think that the key though is that there is a some type of bill could surface. It doesn`t have to be the Senate bill. But a bill can surface where we would have -

HAYES: John -

MURGUIA: -- to support it.

HAYES: -- John Boehner needs to listen to his conscience, he`s got to answer to himself and it -- really what his moral calling in this and I think that we stop appealing to that because we just assume the worst about people -- the Republicans implacable -- he could do this tomorrow. Janet Murguia of the National Council of La Raza. Thank you.

MURGUIA: Thank you.

HAYES: Coming up, a new round in the increasingly gnarly Cheney family feud. It is a very Cheney Christmas, ahead.

(COMMERCIAL BREAK)

(BEGIN VIDEOCLIP)

Female: We`re proud of our family`s deep roots in Wyoming.

Female: We`re proud of our Grandma and our Grandpa. He was vice president of the United States.

Female: And we`re very proud of our mom who`s running for the United States Senate.

LIZ CHENEY, ATTORNEY AND POLITICAL COMMENTATOR: I`m Liz Cheney and I approve this message.

(END VIDEOCLIP)

HAYES: So Liz Cheney wants you to know that she`s all about family and the reason she`s stressing her family in that political ad is that her family is the only reason she`s even a plausible candidate for Wyoming`s Republican Senate primary. And plausible might be stretching it. Over the summer a poll showed Cheney had a whopping 28 point disadvantage to incumbent Senator Mike Enzi. Of course she`s running a state she last lived in in 1978 where more recently she was fined for buying a fishing license before fulfilling her residency requirements.

Well, maybe she`s thinking her dad can save her campaign because tomorrow Dick Cheney will be the keynote speaker at a $10,000 per couple fundraiser for a Liz Cheney super PAC. It might strike you as odd, given that Dick Cheney, who`s tapping into his D.C. fundraising network for his daughter`s senate race in Wyoming, recently criticized Mike Enzi for basically doing the exact same thing.

(BEGIN VIDEOCLIP)

DICK CHENEY, FORMER VICE PRESIDENT OF THE UNITED STATES: As a record, if you go back and review his finances, (inaudible) getting about 84 percent of his campaign funds from Washington-based PACs. That`s more than any senator of either party. He doesn`t get much money from Wyoming.

(END VIDEOCLIP)

HAYES: Of course another reason Liz Cheney wants to remind you how much she loves her family is that her sister Mary recently called Liz out over the fact that she has a funny way of expressing her sisterly familial love. Things got a little hairy between the sisters last month after Liz told Fox News that gay couples shouldn`t be allowed to marry. Her sister Mary is gay and married with two kids. The dispute went public when Mary`s wife took to her Facebook page to write, "Liz has been a guest in our home, has spent time and shared holidays with our children. To have her now say she doesn`t support our right to marry is offensive to say the least.`

According to Mary the two sisters have not spoken since the summer. Well now comes Father Knows Best who yesterday appeared to reprimand daughter Mary and her wife for talking out of turn.

(BEGIN VIDEOCLIP)

CHENEY: We, you know, we`re surprised when there was an attack launched against Liz on Facebook, and wished it hadn`t happened and do believe we`ve lived with this situation and dealt with it for many years. And so it`s been dealt with within the context of the family and frankly that`s our preference is to -

(END VIDEOCLIP)

HAYES: You can bet it`s going to be a gnarly Christmas in the Cheney household. Joining me now NBC News political analyst and editorial director of the "Huffington Post" Media Group. Howard Fineman. I could not believe -- I seriously could not believe that Cheney said that.

HOWARD FINEMAN, POLITICAL ANALYST AND EDITORIAL DIRECTOR OF THE "HUFFINGTON POST" MEDIA GROUP: That last thing that he said there?

HAYES: Yes -- that Dick Cheney came out -- I mean, talk about

FINEMAN: Yes.

HAYES: -- fueling the fire to this whole thing.

FINEMAN: Well, no, what I -- what I loved about that, Chris was the way -- the Cheney-esque, the inimitably Cheney-esque way in which he said it. He said there was an attack launched.

HAYES: Launched, yes.

FINEMAN: Well, it sounded like missile strikes in Iraq. And that`s -- those are the Cheneys, those lovable Cheneys.

HAYES: Well, and the lovable Cheneys narrative here -- I mean, what I think is there was some talk about in the beginning -- a month ago when this whole tete-a-tete happened between the sisters -- that was this being staged? Did it help Liz Cheney because it distanced her from this and that`s going to be popular with the conservative base voters in the Wyoming primary. And the more that -- this feels genuine, legitimate, gnarly as I said before and not helpful to Liz Cheney.

FINEMAN: No, I don`t think any of that is helpful to Liz Cheney because if you do want to focus on the family, you want it to be that`s sort of your calling card. You want it to be kind of a happy family story and not -- not this one that`s sort of equal parts, you know, Shakespeare in a bad, bad off, off-Broadway play. So, that`s not good but the PAC thing just astounds me, it absolutely astounds me. If you want to talk about that because I love the fact that the name of the PAC that she just started to prove her Wyoming-ness is called the Cowboy PAC. But their fundraiser tomorrow night here in Washington D.C. is at Cafe Milano --

HAYES: That is perfect.

FINEMAN: -- which is well known as the ultimate sort of Europeanized -- well it`s the Washington lobbyists` idea of a fancy Italian restaurant.

HAYES: Right.

FINEMAN: In Georgetown no less and of course all the people running the PAC -- I looked into the backgrounds of the people running this new supposedly independent super PAC -- they`re all McCain supported. They`re all people who support -- establishment Republicans who supported John McCain down the line, who supported Bob Dole down the line. You know, these are the establishment Republicans that Liz Cheney claims she`s running against, which is absurd on its face to begin with --

HAYES: And that`s -

FINEMAN: -- since her father`s the ultimate establishment Republican.

HAYES: -- and that`s what`s so fascinating to me about this primary -- it`s my favorite primary right now because all these other primaries we categorize in these ideological terms -- is this Tea Party or establishment, pro-business, anti-business -- there is no ideology here. This is Dick Cheney and Liz Cheney saying `Did you see our last name? that Senate seat is mine -

FINEMAN: Right.

HAYES: -- why don`t you take a hike?` -- and

FINEMAN: -- you`re right.

HAYES: -- trying to just basically just use their raw muscle and influence and fundraising prowess to just boot Mike Enzi even if it costs Dick Cheney every last friendship and good relationship he has with anyone in his party.

FINEMAN: Yes, now he`s going to draw down what`s left of the chits that he has from all over Washington, indeed, all over the country, to raise money for his daughter and he`s going to go on TV on every attack venue he can find to utterly trash Mike Enzi to the extent that he can. Poor old Mike Enzi`s kind of like a, you know, jackalope wandering onto the highway in Wyoming and you know he`s a three-term, where he wants a fourth term, he`s a you know former shoe salesman, an accountant and you know he`s kind of a shy, nice guy. Who, by the way, I think has one of the higher conservative voting records in the Senate. I mean, it`s not -

HAYES: Oh, yes, I mean, yes, exactly, and that`s what I mean by there`s no ideological content here.

FINEMAN: Yes, no, there`s -- there really isn`t, there really isn`t. And the arrogant -- and I you know -- I don`t like to say these kinds of things because I don`t like to call people names, but the sheer arrogance -

HAYES: Yes.

FINEMAN: -- of what the Cheneys are doing is truly -

HAYES: It`s really -

FINEMAN: -- breathtaking and I know Wyoming. I`ve spent time in Wyoming. It`ll be really interesting for me to see if the Republicans

EMILY TISCH SUSSMAN, DIRECTOR OF YOUNG DEMOCRATS OF AMERICA: The pope is killing it. He is just killing it. He is bringing new people back in. He is bringing young people back in. And, he is running for the left of just about everyone.

(END VIDEO CLIP)

HAYES: It would be hard to find and we will talk about and globally admired figure right now than the pope, Pope Francis. He has become the world`s celebrity, a progressive pope, it appears, who was revealed this week, once worked as a bouncer at the Buenos Aires night club before he entered the priesthood. There are exclusive photos.

Now, that he is a pope, it is reported he may be sneaking out of the Vatican at night in disguise to personally feed the homeless. This Universally well-loved figure is making enemies now, particularly in the American right wing. In his first paper altercation this week, his strong run about the perils of unfair capitalism and contempt for the poor caused storm from the right wing reaction and compelled Rush Limbaugh to call the pope -- the pope, a Marxist. But, there is no greater sin in Limbaugh`s book than to give aid and comfort to the enemy that is Barack Obama. And, so when the president cited Pope Francis` words in him coming to quality speech today, Limbaugh lost his mind.

(BEGIN VIDEO CLIP)

RUSH LIMBAUGH, POLITICAL COMMENTATOR: The pope is ripping America. The pope is ripping capitalism. The pope is ripping trickle down economics. And, Obama is having an orgasm.

(END VIDEO CLIP)

HAYES: Well, hear just what President Obama said when we return. Meanwhile, you stay classy, Rush Limbaugh. We will be right back with former chancellor of the D.C. public schools, Michelle Rhee.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

PRES. BARACK OBAMA, CURRENT PRESIDENT OF UNITED STATES OF AMERICA: Some of you may have seen just last week, the pope himself spoke about this at eloquent length. How can it be, he wrote, that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points? But this increasing inequality is most pronounced in our country. And, it challenges the very essence of who we are as a people.

(END VIDEO CLIP)

HAYES: That was the president earlier today at a major economic policy speech, calling income inequality defining challenge of our time, and highlighting the problem is not just the huge gap between the rich and everyone else in America.

It is also the fact, it is getting harder and harder for people in the bottom to rise in the middle but over the top. Despite, the long-standing notion of American dream allows anyone to move on up, the reality is that Americans have a less economic mobility than people in Canada and much of Western Europe. And the problem has been getting worse.

(BEGIN VIDEO CLIP)

PRES. OBAMA: A child born in the top 20% has about a two in three chance of staying at or near the top. A child born into the bottom of 20% has a less than 1 in 20 shot in making it to the top. This is ten times likelier to stay where he is.

(END VIDEO CLIP)

HAYES: For years, we have been hearing so much about political class, democratic and republicans that education is the main solution to that problem, the president talked about. If we just figure out how to better educate our poor kids. We could increase social mobility and reduce inequality. And, the president today acknowledged that may not be enough.

(BEGIN VIDEO CLIP)

PRES. OBAMA: And, the outcomes of the debates we are having right now, whether it is the health care, or the budget, or reforming our housing and financial systems. All these things will have real practical implications for every American. And, I am convinced that the decisions we make on these issues over the next few years, will determine whether or not our children will grow up in America when opportunity is real.

(END VIDEO CLIP)

HAYES: Joining me now, Michelle Rhee, former Chancellor of the D.C. public school, currently the CEO and founder of StudentsFirst. And, Michelle I wanted to have you on because I have seen you talk about your work in education as fundamentally driven towards precisely the kinds of goals the president talks about today, reducing inequality, expanding social mobility.

And, I wonder what your take is on how much of that can be achieved through education, while we have seen outside the schools such a massively expanding amount of poor people.

MICHELLE RHEE, FORMER CHANCELLOR, DC PUBLIC SCHOOLS: Yes. I think part of the problem that we have in the debate today is that people think that you either have to solve the problem of poverty through social programs or it is all about education. And, I actually think that the answer is in the middle.

You know, you have to have a good social safety net, especially for children, to ensure that they are getting some of the services that they need. But, it is also up incumbent upon us as a society to make sure that kids are educated well, so that they have the skills and knowledge that they need to be productive members of society as adults.

HAYES: Can I ask you, if you could wave a magic want and take a kid and you could take a poor kid, and make them upper middle class and give them lousy teachers. Or you could take poor kid, and change out their lousy teachers, and give them great teachers but keep them poor, what would you do?

(LAUGHING)

RHEE: Well, I would not do either. I think what we have to aspire to as a nation is ensuring that every child across this country has highly effective teacher in front of them every single day. And, it does not matter if you go to low income communities or upper income communities in the suburbs, when you ask parents, you know, about their kid`s schooling experience, unless all of them will say that teacher quality matters a tremendous amount. I think that people understand that -- you know who is standing in front of their children every single day for 180 days a year for six and a half to seven hours a day makes a big difference. And everybody wants to ensure that their kids have high quality teachers.

HAYES: Of course, right. So -- but the problem is -- here is the problem, we have over the last 12 years had a tremendous amount of focus on teacher equality. We have done a lot of changes. We have passed no child left behind. We re-authorize then. We have seen transformations from every city that I have been a reporter and lived in, from Chicago to Washington, D.C. where you were to New York, to Atlanta to all sorts over the place, right?

We have seen a tremendous national debate. We have seen billions and billions and billions of dollars poured into these questions. We have seen hedge funds, giving tons of money to make sure the teachers are accountable, that we have high standards. At the same time, child poverty in this country has expanded.

The republicans are talking about cutting $40 billion from food stamps. And, it seems to me like there is not the same level of attention from the community, from a political class, that this is a huge threat to the success of these kids.

RHEE: Well, I think that -- you know, different people have different interests. And, I certainly think that, you know -- for example, something like child nutrition and child hunger has over the last couple of years gained tremendous steam. And people understand that, you know, when kids come to school hungry that makes a huge difference in their ability to learn. Right?

So you have got advocates who believe that is incredibly important and who are pouring a ton of resources into that. And, that is an absolutely worthy cause. You know, as an educator, I would say because we are with children for a significant portion of their days and of their years that we should also be doing everything within our power to make sure that the schooling environment that they are in, you know, gives them the skills that they need to be successful in life.

So you know, I think that you know, to say that well, you have got lots of people pouring a lot of money onto this, does that mean that they are ignoring other things? I don`t think so. I don`t think there is a person out there that I know that says that poverty doesn`t matter.

I think that people acknowledge that, and they know that there are lots of programs that should be in place and that are very important. But what happens in the classroom every day, in the schools matters just as much.

HAYES: Well, I personally think the social science leading me to the conclusion does not matter just as much. It actually matters less than what happens outside of the schools. And, I think if you look at the comparative data we have from Pisa, let`s look at the places that doing it right. That have a whole variety of educational policies, Finland, Switzerland, Poland, Japan. There are independents of new innovation, teacher compensation, there is a whole bunch of different practices. The thing that jumps out, they have a lot less poor kids. I mean many, many, fewer poor kids.

RHEE: What is it that you are trying to day, because to your point, let`s look at Pisa, right? So, if you look in the United States from 2003 until now, on the Pisa test --

HAYES: Yes.

RHEE: -- actually, the poorest kids in this country have gained about 11 points. The richest kids in this country have actually fallen by seven points. So, the small gains we have seen as the nation have been accomplished by the poorest children.

HAYES: Right.

RHEE: That, I think, says, that you know even though kids are growing up in poverty. Even though they have tremendous challenges we can still expect that we have the right schooling and guidance, they can learn, they can thrive, they can grow academically.

HAYES: They can learn. They can thrive. They can grow academically, may be true but what I am trying to say, is that the socioeconomic path to them even if they learn or thrive academically is essentially a death hint, that we are producing a society in which we have nothing -- and I am very serious. I mean the social mobility data suggests this, even if we are getting better at educating those kids we are producing a society in which we have no jobs for them to go into. We have no path forward for them.

RHEE: So, here is the thing. I think if you look at -- you know, any country, any sort of point in history, so you know -- when you care about poverty, I believe that one of the most important tools that you have to break the cycle of inner-generational poverty, is providing kids with a great education, right?

How can you expect kids to lift themselves out of poverty, to have a different circumstance than what their parents had if you do not provide them with a high quality education that gives them the skills that they need to get them a well paying job?

HAYES: And, I think that what we are seeing in this economy and what we are seeing in the last 12 years is precisely the fact that that is not cashing out in the real world --

RHEE: But, here is what I think --

HAYES: -- But, we are seeing improvement and achievement at the bottom, even at the same time we were seeing widening social inequality and declining social mobility.

RHEE: I think that both of those are huge issues, but when you look at the disconnect that exists. Talk about the American employers today. They will tell you that they -- they have problems finding people with the skills and the knowledge that they need to fill some of their mission critical jobs. And yet we have the unemployment rate that we do today. That means there is a mismatch between our public education system and what the employers of tomorrow are going to need from their work force, and that is where we need more alignment.

HAYES: Joining me now, Bob Herbert, distinguished senior fellow for Demos, author of Promises Betrayed, and Teresa Ghilarducci, Director if Schwartz Center for Economic Policy Analysis at The New School Social Research. I want to talk about the president talking about inequality, social mobility, the conversation I just had with Michelle Rhee about those issues.

BOB HERBERT, DISTINGUISHED SENIOR FELLOW FOR DEMOS: Well, when you look at the education, my personal opinion is that the so-called education reform movement is one of the biggest fraud of my lifetime. There is two essential points about education. One is that we have been cutting services to public schools drastically. I mean we have been closing schools, look at Chicago, 50 schools I think have been closed. We have been firing teachers over the past several years.

HAYES: Particularly in the wake of the great recession. We have laid off a lot of teachers.

HERBERT: And not responding when the economy has gotten a little bit better, so the idea that we are trying to help these kids at the same time that we are cutting services to public schools is crazy. The second thing is that you are never going to be able to improve the schools, the education outcomes in this country if you do not deal with poverty.

HAYES: And, I thought the president today gave a very comprehensive vision of sort of inequality and social mobility, and how you can`t just educate your way out of the problem.

TERESA GHILARDUCCI, DIRECTOR IF SCHWARTZ CENTER FOR ECONOMIC POLICY ANALYSIS AT THE NEW SCHOOL SOCIAL RESEARCH: You asked the question whether or not it is better to be rich, and have bad teachers, or whether to be poor and have the best teachers in the world and the evidence is out, that if you are rich, you have 30 million more words by the time you reach kindergarten. You actually have an extended education through enrichment activities. Yes, the kids have heard 30 million more words, so vocabulary is higher by a hundred of thousands. We should be extending the school day in school in the year by 25% that takes more teachers, that takes more resources.

HERBERT: But you cannot deal with inequality. You cannot deal with poverty if you don`t deal with jobs. The way to get kids out of poverty, the way to increase mobility is to put people to work.

HAYES: And, that was the thing I felt like that, you know, the president today talked about minimum wage. He talked about the job stimulus. But, in some ways, I think the criticism of the speech is that if this economy exists in a republican, the democrats would be going crazy about it, because the nature of the economy looks like a republican economy, in so far as it is a very unequal one, right?

GHILARDUCCI: Yes. It is very inequality. The evidence is out on that too causes low economic growth. You can`t get job growth with these levels of inequality. You do not have the jobs that actually invest in education, or in health care. You have your tax breaks skewed to the rich and spend more time projecting this --

HAYES: You have a lot less productive -- productive consumption, essentially, the money points back to the economy.

HERBERT: You don`t have demand because people don`t have jobs or they`re working at low wage work. So you don`t have the demand that would spark business investment.

HAYES: And, the president today I think was making this very practical case, which was interesting, he kept saying, because it is not mantra physics. It is not ideological. This is actually the thing that is not working. And, I do think that pragmatic argument embedded inequality has been a rising argument in the recent years.

GHILARDUCCI: Oh, no. There has been evidence on both sides of the economist spectrum and that is in the right wing, the up wing, the down wing. The data is out, but inequality is correlated with sluggish growth. That some of the most equal societies in the world actually have the highest economic growth and the most signatures on education.

We top the nation and we top the world in one category. We could relapse the recession more low income jobs, more wage jobs than any other country, an advanced capitalist country, 25% of our jobs are paid 45% of the median wage. In Belgium, half -- of the middle income -- we are the biggest percentage.

HAYES: Bob Herbert of Demos, Teresa Ghilarducci of The New School for Social Research, thank you so much. That is "All In" for this evening. The "Rachel Maddow" show starts right now. Good evening, Rachel.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.END

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